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Sterling was higher this morning after falling to a near
two-week low yesterday as investors waited for headlines on the progress of
Brexit negotiations between the EU and Great Britain.

With only a few weeks to go before Britain leaves the EU,
officials are at an impasse over the so-called backstop aimed at ensuring that
there is a frictionless border between Northern Ireland and Ireland.

Lawmakers will vote again on the deal next week. British
Prime Minister Theresa May is expected to say today that the EU should give
ground in discussions over the backstop before then to help it go through.

Uncertainty over whether British lawmakers will support
May’s deal next week is showing up in the currency derivatives markets, with
one-month implied volatility rising to its highest levels since mid-January.

The EU has told Britain to rework its backstop proposal by today,
but a British source said yesterday that the Brexit impasse was unlikely to be
broken before the weekend because the EU was not moving.